tag:blogger.com,1999:blog-8515247115132134144.post2232492126809980212..comments2024-02-17T12:34:01.400-08:00Comments on Illusion of Prosperity: Hook, Line, and StinkerStagflationary Markhttp://www.blogger.com/profile/04568993350246477976noreply@blogger.comBlogger9125tag:blogger.com,1999:blog-8515247115132134144.post-53638623822443804472012-05-30T23:57:29.020-07:002012-05-30T23:57:29.020-07:00Anonymous,
Based on your observation, I've ad...Anonymous,<br /><br />Based on your observation, I've added a bonus chart to this post.<br /><br />Thanks!Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-19084313073353872872012-05-30T22:45:20.963-07:002012-05-30T22:45:20.963-07:00Yep , I see what you mean.
You're right , the...Yep , I see what you mean.<br /><br />You're right , the new slope , especially one that extends to some realistic net worth valuation ( which might end up quite a bit lower than the 2011 figure! ) would show the break clearly.<br /><br />Thanks , that was bugging me.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-46433567585032368812012-05-30T21:15:14.732-07:002012-05-30T21:15:14.732-07:00In summary...
Had I done one trend line for the p...In summary...<br /><br />Had I done one trend line for the period from 1952 to 1980 then it would have been steeper.<br /><br />Had I done another trend line from 1980 through 2011 it would have been flatter.<br /><br />It's hard to spot the transition in the chart, but it is there.Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-19617521524831585602012-05-30T21:11:00.086-07:002012-05-30T21:11:00.086-07:00I would also point out that my trend line doesn...I would also point out that my trend line doesn't use any data past 2000: Q1. That makes the line steeper than it would be if I included all the data.<br /><br />I was attempting to show how far we are from the trend before things started falling apart.Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-84478762606559361262012-05-30T21:07:53.820-07:002012-05-30T21:07:53.820-07:00Anonymous,
Thanks to the exponential growth of bo...Anonymous,<br /><br />Thanks to the exponential growth of both series, all the data from 1952 to 1980 is bunched up on the chart.<br /><br />1952:Q1 has $25k of real total credit market debt owed per capita<br /><br />1980:Q1 has $56k of real total credit market debt owed per capita<br /><br />That entire time period makes up a small part of the chart.<br /><br />So if you look real close at the 1952 to 1980 time period on the chart, I think you can see a different slope. It's steeper. Credit was offering more bang for the buck.<br /><br />Hope this helps.Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-91061014613966848052012-05-30T20:43:16.746-07:002012-05-30T20:43:16.746-07:00Something about the graph doesn't jibe with ot...Something about the graph doesn't jibe with other measures of debt and net worth that I've seen , but I can't figure it out.<br /><br />It's been widely noted that from the 1940s to ~1980 , total debt/gdp was quite stable around 150-160% ( excluding the financial sector debt , admittedly ) and also net worth as a % of gdp ran about 300-350% , as I recall. So , for $1.50 in debt we got $1.00 in gdp and about $3.00 in net worth.<br /><br />Since 1980 , it's taken growing amounts of debt per dollar of gdp , reaching about $6-7 per dollar gdp at the end of the bubble. During the same period , net worth climbed to ~ 500% of gdp as first stocks , then housing , bubbled. Still , for the same $1.50in debt , we got maybe $.25-.30 of gdp , and , say, 5x that in net worth , or $1.25 - $1.50.<br /><br />The earlier deal was clearly the better one , if only for sustainability purposes.<br /><br />I'm surprised that I don't see any transition between these two regimes on your graph. I'll have to think about it some more , I guess.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-29169768874327004432012-05-30T13:38:33.043-07:002012-05-30T13:38:33.043-07:00Mr Slippery,
The title of the post made me see a ...Mr Slippery,<br /><br /><i>The title of the post made me see a fish hook shape in the chart, or did it?</i><br /><br />The chart's <a href="http://research.stlouisfed.org/fred2/graph/?g=7Ad" rel="nofollow">shape</a> inspired the title!<br /><br />I was concerned that I was obfuscating the fish hook image with my annotations. Glad you can still see it. :)Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-71213536640332174222012-05-30T10:31:02.410-07:002012-05-30T10:31:02.410-07:00The title of the post made me see a fish hook shap...The title of the post made me see a fish hook shape in the chart, or did it?<br /><br />The fish-hook economy is not a good sign. Neither is the 10-year hitting all time lows -> 1.63! We are about 60 basis points away from Japan.<br /><br />FTW.Mr Slipperynoreply@blogger.comtag:blogger.com,1999:blog-8515247115132134144.post-48989034878682098482012-05-29T23:02:46.744-07:002012-05-29T23:02:46.744-07:00Apologies to those who click on my charts and expe...Apologies to those who click on my charts and expect a bigger image.<br /><br />As of a few days ago, uploading pictures to blogger gives you WYSIWYG (What You See Is What You Get). Sigh.Stagflationary Markhttps://www.blogger.com/profile/04568993350246477976noreply@blogger.com